One of President Trump's campaign themes was ending diversity, equity, inclusion (DEI) programs, and he moved quickly to address those campaign promises. Within days of his inauguration, the president issued two executive orders (EOs) overhauling how the federal government views programs seeking to advance DEI priorities.
However, implementation of those EOs is off to a rocky start, with court orders and agency missteps delaying the implementation of certain significant aspects of the original directives. As implementation varies across agencies, it is crucial that organizations closely read agency requirements to understand exactly what is required of them.
The DEI Executive Orders
On his first day in office, the president issued EO 14151, Ending Radical and Wasteful Government DEI Programs and Preferencing, which, in part, directed government agencies to terminate "to the maximum extent allowed by law ... 'equity-related' grants and contracts." In the months since, billions of dollars in grants and contracts with a nexus to DEI and DEIA have been cancelled.
On January 21, the president's second day in office, he issued EO 14173, Ending Illegal Discrimination and Restoring Merit-Based Opportunity, mandating a new DEI certification requirements for all federal contracts and grants as well as a provision stating that the counterparty agrees compliance with federal anti-discrimination law is material to payment, a concession that will make it harder for contractors and grant recipients to defend against DEI-related False Claims Act (FCA) cases. Specifically, Section 3(b)(iv) requires:
(iv) The head of each agency shall include in every contract or grant award:
(A) A term requiring the contractual counterparty or grant recipient to agree that its compliance in all respects with all applicable Federal anti-discrimination laws is material to the government's payment decisions for purposes of section 3729(b)(4) of title 31, United States Code; and
(B) A term requiring such counterparty or recipient to certify that it does not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws.
While there have been some reports of ad hoc implementation of these DEI certification requirements in federal contracts, including public reports that the State Department has asked some European companies to agree to these provisions, which is of questionable utility given that most European entities are not subject to U.S. anti-discrimination law, implementation of the certification requirement has been slower than expected. Originally, many anticipated that agencies would implement the certification requirement through the FAR deviation process under FAR Subpart 1.4, a process that was used to quickly implement the COVID-19 mandate. Whether that is due to ongoing litigation or the ongoing FAR rewrite, we have not seen the deviation process used in the contract context.
Implementation of the Certification Requirement
We have, however, seen more rapid implementation of the DEI certifications in the grant context. For example, the Environmental Protection Agency (EPA) implemented the requirement by updating its grant terms and conditions. On April 3, the EPA General Terms and Conditions, effective October 1, 2024 or later, were updated to state:
"the recipient agrees that its compliance in all respects with all applicable Federal anti-discrimination laws is material to the government's payment decisions for purposes of section 3729(b)(4) of title 31, United States Code; and (B) the recipient certifies that it does not operate any programs promoting Diversity, Equity and Inclusion that violate any applicable Federal anti-discrimination laws."
As required by EO 14173, this new materiality provision will almost certainly make bringing civil enforcement actions under the FCA easier (although it will likely not be dispositive). The new provision also incorporates the EO's "certification requirement" that the recipient does not operate any programs promoting DEI that violate applicable federal anti-discrimination laws in new funding awards and funding amendments made on or after April 3, 2025.
Similarly, the National Institutes of Health (NIH) has also implemented the materiality and certification requirements through updating its Grant Policy Statement. On April 3, the NIH issued Notice Number NOT-OD-25-090, adding the language below to its terms and conditions:
"Recipients must comply with all applicable Federal anti-discrimination laws material to the government's payment decisions for purposes of 31 U.S.C. § 3729(b)(4)."
"By accepting the grant award, recipients are certifying that:
- They do not, and will not during the term of this financial assistance award, operate any programs that advance or promote DEI, DEIA, or discriminatory equity ideology in violation of Federal anti-discrimination laws; and
- They do not engage in and will not during the term of this award engage in, a discriminatory prohibited boycott."
There are two noteworthy differences between the EO 14173 certification requirements and the NIH's revised terms and conditions. First, while the January 21 EO requires that grant recipients agree that compliance with applicable federal anti-discrimination law is material to payment, the NIH implementation actually states, likely unintentionally, that recipients only have to comply with federal anti-discrimination laws that are material to payment. Second, while the January 21 EO makes clear that it requires certification of compliance only with applicable federal anti-discrimination law, the NIH's certification requirement leaves out the word "applicable." This distinction is particularly important for non-U.S. entities that typically are not subject to U.S. anti-discrimination laws.
In addition, the Department of Labor (DOL) has taken a less formal approach to implementation. According to a court order, DOL has issued several notices to grant awardees that demonstrate an intention of implementation. For example, one day after the January 21 EO was issued, Chicago Women in Trades (CWIT), an Illinois nonprofit who sued the DOL challenging the constitutionality of the certification provision, received an email stating, "[e]ffective immediately, all recipients of federal financial assistance are directed to cease all activities related to [DEI or DEIA] under their federal awards, consistent with the requirements of the Executive Orders." On March 20, a similar email was recirculated by DOL, however, it was rescinded five days later as DOL claimed it was sent in error.
CWIT was largely successful in its lawsuit as U.S. District Judge Matthew F. Kennelly ruled, in relevant part, that DOL cannot require federal grant recipients to certify that their DEI programs do not violate applicable federal anti-discrimination law and prohibited the termination of the plaintiff's Women in Apprenticeship and Nontraditional Occupations (WANTO) grant on the basis that it was "equity-related." We wrote about the ruling and the partial grant of a preliminary injunction blocking DOL efforts to enforce the certification requirement nationwide in an April blog post, which can be found here.
Conclusion
While the Trump administration's priorities are clear, execution has proven far more complex. As these EOs continue to face legal scrutiny and federal agencies continue to take divergent—and at times legally questionable—approaches to implementing the new certification requirements, it is critical that organizations carefully parse agency requirements.
Although some reports of the impact of these DEI certifications, which do not prohibit all programs that promote DEI, but rather only those in violation of federal anti-discrimination law, have been exaggerated, contractors and grant recipients should assess their DEI programs prior to accepting these new certifications.
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